first majestic silver

Can't See The Forest For The Trees

July 22, 2013


I think the title script, like the subject matter, reveals more than first meets the eye. While almost everyone is trying to convince their readers that they have tremendous foresight, in reality most are just followers trying to hop on the latest bandwagon. They use charts to try and convince us that they can read the future, but in this case they don’t realize that charts are actually misleading.

“It could probably be shown by facts and figures that there is no distinctly

 native American criminal class except Government.”                “ Mark Twain”


What are they and why are they misleading in this situation?  Charts are a reflection of human nature commonly referred to as MARKET SENTIMENT. But today’s Gold and Silver situation has nothing to do with Investor Sentiment; rather, it is the direct result of the biggest, contrived and manipulated fraud in trading history making the bear raids of the past seem like mere child’s play. It has been estimated that the latest bear raid defrauded the investing public to the tune of $1.2 trillion in two days. What most don’t seem to realize is that it was merely a desperate attempt by a DESPERATE government to strengthen its currency and hang on to its position as the world’s only reserve currency. But in the end, the devils who have been manipulating the Gold and Silver markets since the early 1970’s will get their just comeuppance.

The tables have now turned and anyone who can’t see it is just not looking. To begin with, the Precious Metals have the natural laws of economics on their side. “A LOWER PRICE INCREASES DEMAND” (Economics 101).  Gold has another but much less well known Law of Economics going for it: Gold is a “SUPERIOR GOOD”. What that means is that when a Superior Good rises in price, unlike all other products demand increases; the higher the price increases go, the higher demand increases.  

Once the general public and the professionals realize that they have been defrauded, they will be coming back into the GOLD and SILVER markets with a vengeance; not only to get even but more importantly, to make money and most important of all, “TO PRESERVE THEIR BUYING POWER and PROTECT THEIR WEALTH.”


The CFTC releases its CoT report late every Friday afternoon, as of the preceding Tuesday.  So the latest available data is as of Tuesday, July 9th and it is truly stunning.  Gold-futures speculators held the short side of an astounding 178.9k contracts!  This was at least a 12 year high; the most-extreme gold-futures spec short position in its entire history.

The sheer size of this bearish bet is breathtaking.  Each COMEX Gold contract controls 100 troy ounces of Gold.  So American futures speculators have borrowed and sold 17.9 million ounces!  That even dwarfs the record selloff in the holdings of the flagship GLD Gold ETF over the past 7 months, which now weighs in at 417.3t.  This epic Gold short is wildly unprecedented. (Adam Hamilton)

The risks of such a huge downside bet on Gold are mind-boggling and therefore provide all the necessary makings of a HUGE SHORT COVERING RALLY.  By definition, futures speculators are not producers since they aren’t Gold miners: The only way they can deliver the 17.9 million oz of Gold they’ve borrowed is by buying it in the futures market.  But even that won’t be easy - 17.9 million oz is the equivalent of 1/5th of the world’s total production!

My 2005 Gold projection of $6,250 by 2017 did not take into account the recent $1.2 trillion fraud nor did I account for $85 billion per month of QE to Infinity, so my projection may be somewhat understated and have to be raised as well as the time period be shortened. But I will leave it as is for the time being since it would only be an exercise in mental masturbation and I have gotten too old and lazy for that.


Could this be the BLACK SWAN that I have been expecting as well as the WAKEUP CALL that the Bull Market is also nothing but a manipulation by a corrupt government creating massive irrational exuberance using lies, fraud and false government reported statistics and massive printing of Fiat Money ($85 billion/month) in an effort to convince its people and the world that all is right with the economy and the US is not bankrupt. But like Europe and Japan, it is definitely bankrupt and it is just a matter of time before the whole world realizes it. We are about to witness and experience the inevitable end of Socialism. The only thing that can salvage the situation is a return to FREE MARKET CAPITALISM. However, with the world’s education systems having been almost completely hijacked by Keynesian Socialism (beginning in the 1920’s), there are no longer any influential FREE MARKET economists left who are capable of leading us and the world out of the hole we have dug ourselves into since FDR and his Democrats convinced us that they had saved “capitalism from itself.”  


There is only one thing we, as individuals, can do now and that is to save ourselves and our families “financially” by buying Gold and Silver coins and taking personal possession of them.

Gold and Silver mining companies are now more undervalued in relation to their bullion prices than they have ever been. They are all down an average of 50% or more since their 2011 highs. To be safe: Make sure that the majority of their mines are in the US or Canada. Maybe even mining friendly Mexico, which I am not so sure of: Remember what happened to MAG SILVER (MVG), but at least that was not government sponsored. So maybe we can add Mexico as a safe country to invest in.

By now you all should already have a list of PM mining companies that you were prepared waiting for that trigger. I think that the announcement of the DETROIT CITY BANKRUPTCY could be that trigger.

The following is an example of a strategy, using my three favorite companies that you may consider using:

#1 ROYAL GOLD (RGLD)    BUY OCT 50 CALLS @ $2.40, while simultaneously selling OCT 45 Puts for a credit of $3.90.  Enter both orders as a spread order with a credit balance of $1.40.

#2 SILVER WHEATON (SLW)   BUY SEPT 23 CALLS @ $1.00 while simultaneously selling OCT 23 PUTS @ $2.65.   Enter  both orders as a credit spread of $1.65.

#3 FRANCO NEVADA (FNV)      BUY OCT 40 CALLS @ $1.40 while simultaneously selling OCT 45 PUTS @ $7.00.  Enter both orders as a credit spread of $5.50.

These three are my favorite low risk Precious Metal Stocks since we have entered what I consider to be a low risk excellent buying opportunity. Do your own DUE DILIGENCE and guide yourself accordingly.




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Aubie Baltin CFA, CTA, CFP, PhD.                                              

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This article, like all my others, is for education purposes only and is designed to help you make up your own mind; not for me to make it up for you. Only you know your own personal circumstances, so only you can decide the best places to invest your money and the degree of risk that you are prepared to take.

It is estimated that the total amount of gold mined up to the end of 2011 is approximately 166,000 tonnes.
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